Editor’s Note: The following is adapted from the author’s recently released book, Everyday Freedom.

Trust in institutions is at all-time lows. Schools and hospitals are distrusted by two-thirds of Americans, large companies by even more, and Congress by almost everybody. 

The one trust bright spot is small business, with a 65 percent trust level. What is it that small business has that other institutions do not? Small business retains the human connection. The guy in the local hardware store will talk with you about how to fix the problem. The lady at the cleaners will discuss the stain. The book shop proprietor will describe why she liked a book.

The human connection is being wrung out of the large institutions of society, such as hospitals, schools, and business. Instead of caring for patients, doctors and nurses spend half the day filling out forms, contributing to epidemic of burnout. Patients’ eyes glaze over as they sign consent and privacy forms that, I suspect, no one has ever read. Particularly with doctors you don’t know well, the lack of candor is often palpable. As one pediatrician told me, “You wouldn’t want to say something off the cuff that might be used against you.” 

Schools are a red tape jungle. Teachers have lost control of the classroom because of fear of being dragged into a mandatory disciplinary hearing. Instead of inspiring students, teachers transmit their own boredom when regurgitating mandatory lesson plans. Principals have lost any meaningful management authority because of teachers union collective bargaining agreements. Legal compliance is the main job of principals and the burgeoning administrative staff. Forms are everywhere.

The workplace is the new red tape frontier, where fear of offending people has made it difficult to befriend them. Mandatory video training sessions have one clear message: Watch your words. Jokes are taboo. You wouldn’t want anyone to feel unsafe. Have you checked their preferred pronouns? Candor by management is replaced by scripted codes. Job references are banned, even for superlative performers. Camaraderie? Co-workers and managers walk on legal eggshells and mouth platitudes. Have a nice day.

Discussions about freedom tend to focus on opportunities for individuals, not institutions. Almost no one talks about the freedom of people with institutional responsibility. Institutions are treated as inanimate objects, not social enterprises that succeed or fail depending on the performance of real people.

Our society operates largely through institutions. They provide most of our needs, including education, healthcare, public services, and personal livelihood. The institutions of society are also the vehicle for individual achievement and pride, accomplishing much more than any person alone could do. An individual can strap into the institution with the engine already running. The institution provides the purpose, and the resources, and values of interaction, needed to enable people to pull together. They empower people to focus on higher goals, and to make the best of themselves. 

The success of people within institutions is a proxy for how well a free society works. If healthcare and other services are inefficient, the unnecessary waste precludes other public goods. If people in charge of institutions aren’t free to uphold standards of performance, and norms of civil interaction, institutional culture will wither and institutions will become less responsive. If the school principal isn’t free to use his judgment, pretty soon teachers will be shackled to rulebooks and scripts, and the parents’ ideas won’t matter because no one can act on them. 

How Red Tape Causes Institutions to Fail 

In theory, rules and procedures are aimed at making sure things work fairly and properly. Rules and procedures also provide a justification if someone brings a lawsuit: “We followed the rules.” 

In practice, red tape diverts people from the job at hand, including meeting regulatory goals. Studies of nursing homes, for example, found that the preoccupation with compliance undermines the quality of care. The cost or red tape is crippling—30 percent of the US healthcare dollar is spent on administration, or over $1 million per physician. Because red tape is about control, not action, it readily disconnects from real life needs and takes a life of its own—forms require a separate staff to read the forms, and then to follow up, and so on. 

Red tape skews human judgment in ways that tend to degrade the quality of decisions. Human achievement is astonishingly complex, and judgments on what best to do are largely formed in the powerful unconscious part of the brain, where our perceptions are melded with instincts, skills, experience, and values. These judgments can be questioned and changed by reasoning, but the basis of human judgment is still largely of an intuitive nature.

Systems of compliance pull people out of their intuitive senses. People can generally focus on only one thing—in one famous experiment, people asked to count how many times a ball was passed failed to notice a gorilla who appeared. When doing a job, people “disappear into the task,” barely waving at their conscious brain as they act. Red tape makes people pause and think. In most settings, studies show, this results in worse decisions. Firefighters who were trained to remember dozens of rules had a lower survival rate than those who were given a couple of principles. 

Humans are fallible, of course, and an authority framework is needed to make sure people do the job. There’s also a place for external protocols—for example, going over a checklist to make sure you didn’t forget something important. But human accomplishment requires an institutional framework that people can internalize, so that people can act on their judgment. Intuition comes naturally; complying with hundreds of rules is exhausting. Too much compliance causes cognitive overload and burnout—“ever-growing administrative burdens,” as president of the American Medical Association Dr. Jesse Ehrenfeld put it, “that take us away from time with our patients” and create “a pervasive sense of being powerless.” 

Red tape also skews human relations. Trust is basically impossible, British philosopher Onora O’Neill observes, when people don’t feel free to be honest or true to themselves. Other people readily perceive the lack of candor. Spontaneity, which Hannah Arendt considered the “most elementary manifestation of human freedom,” is now too risky. Distrust has a contagious quality, causing people to suspect self-interest and ulterior motives. Instead of diving into projects, people proceed cautiously. Less gets done. Caution replaces pride. It is not surprising that institutions are no longer trustworthy to many Americans—they seem to be preoccupied with compliance and self-protection instead of doing the job. 

Putting Humans in Charge

The decay of America’s institutions comes largely from one incorrect premise: that legal structures can improve human judgment. Coming out of the 1960s, our distrust of unfair authority led us to create operating systems that evaluate the validity of daily decisions as a matter of legal compliance or proof. Did you follow the rule, or the script? Can you demonstrate that your decision is fair to that person?

Fairness and competence are important, of course, but judgment is required to achieve those goals. What’s fair in a classroom requires weighing the interests of all the students, not just the one student being disciplined. The innovation of the 1960s was to try to purge unfairness by extruding daily decisions through the eye of a legal needle. But the effect was to preclude fairness and to perform a kind of lobotomy on human judgment. Decisions were redirected towards compliance instead of achievement. That’s why they work so badly. 

Nor did the system enhance fairness and trust. Trust can never be achieved by an operating system that is premised on distrust. The inability to terminate a poorly-performing employee, for example, is like injecting a depressant into workplace culture—as one study put it, one “bad apple can spoil the barrel.” Putting managerial decisions under legal klieg lights not only skews decisions, but injects adversarial distrust into what is supposed to be a cooperative enterprise. The legal hearings challenging disciplinary or personnel decisions, for example, turn into ad hominem attacks.

The system aimed at perfecting human judgment also misunderstands the limits of law. Law enhances freedom by prohibiting misconduct such as crime, pollution, and other anti-social acts. But law can’t make things work better. Human achievement requires judgment, tradeoffs, and adaptation, and, within institutions, decisions needed to maintain a culture of energy and high standards. Those decisions are the job of managers, not antisocial acts that law should protect against. Putting supervisory decisions to legal proof generally guarantees the unfairness of keeping poor performers. 

No institution inspires trust unless it is fair. That’s why many organizations have oversight committees, or workers councils, that can opine on the fairness of terminating someone. These speed bumps enhance trust that everyone is treated fairly. But they too turn on judgment, not legal proof in an adversarial proceeding.

Law cannot affirmatively create trust. Trust in an organizational setting always requires people acting on their best judgment in a way that inspires confidence. Inspiring a high level of energy within an institution also requires mutual trust that all will be held to the same standards of performance and norms of behavior. That’s why accountability is key to any healthy institution. Take it away and energy quickly dissipates. This partially explains the “deep disaffection within the public service,” as the 2003 Volcker Commission Report found, in which civil servants “resent the protections provided to those poor performers among them who impede their own work and drag down the reputation of all government workers.” 

The litmus test for a working institutional framework is this: Do people with responsibility have the ability to act on their best judgment? Teachers must have the ability to remove a disruptive student without fear of a legal proceeding. Simpler reimbursement systems are required so that doctors and nurses don’t spend half the day filling out forms. Candor and honesty in the workplace are not acts of domination, but essential tools for organizational growth and understanding.

Small businesses enjoy high levels of trust because we know who’s in charge. We can deal with them on a human level. No organization can be effective, management theorist Peter Drucker observed, unless there are “people who make decisions … who are accountable for the organization’s mission, its spirit, its performance, its results.” That’s why law must be pulled back from everyday decisions, and real people be put back in charge of hospitals, schools, universities, public agencies, and other institutions of society.